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Table of Contents
1 Cover
4 Preface
5 1 Introduction 1.1 The General Purpose of the Book 1.2 Overview of Issues Covered 1.3 How the Book Can be Used
6 2 The Concept of Market Value 2.1 Introduction 2.2 Standard Definition 2.3 Criteria for a Good Definition: Clear, Measurable, Concise and Relevant 2.4 Problem 1: ‘Estimated Price’ or ‘Most Probable Price’? 2.5 Problem 2: Shall the Definition Refer to a Competitive Market? 2.6 Problem 3: Should the Definition Refer to Prudent and Knowledgeable Actors? 2.7 Problem 4: Should the Definition Include a Reference to Willing Seller and Willing Buyer? 2.8 Problem 5: Market Value and Turnover 2.9 Highest and Best Use 2.10 Conclusion Exercises
7 3 Finding the Market Value: What Is a Valuation Method and How Should the Methods Be Categorized? 3.1 Introduction and Overview 3.2 The Three Classic Valuation Approaches/Methods 3.3 A Problem with the Standard Classifications 3.4 The Information Base of a Valuation 3.5 A Different Way to Classify Valuation Methods 3.6 Adjustment Methods 3.7 Why Is Regression Analysis (Hedonic Methods) Seldom Used in Ordinary Valuations? 3.8 What Is Really the Cash‐Flow Method? 3.9 Valuation of Development Properties and Option Aspects 3.10 Use of Different Methods in the Valuation of a Specific Object: Concluding Comments Exercises
8 4 Uncertainty and Bias in Property Valuations 4.1 Introduction 4.2 Valuation Variance: Why Do Valuers Disagree? 4.3 Valuation Accuracy: Why Do the Observed Price Differ from the Market Value? 4.4 How Confident Is the Valuer in the Estimated Market Value? 4.5 How Stable Is the Estimated Market Value? 4.6 Client Influence and Bias 4.7 Behavioural Factors 4.8 Valuation Smoothing 4.9 How Self‐Selection Can Lead to ‘Bias’ 4.10 Possible Policy Recommendations 4.11 Concluding Comments Exercises
9 5 Valuation for Lending Purposes and Long‐Term Value Concepts 5.1 Introduction 5.2 Two Competing Theories About Predictability of Property Prices 5.3 Price Bubbles on the Real Estate Market 5.4 The Leverage Cycles and Bank Incentives 5.5 Use Market Value, Make Risk Analysis and Adjust the Loan‐to‐Value Ratio (LTV‐Ratio) 5.6 ‘Long‐Run Value’ as an Alternative 5.7 Alternative Value Concept (1) Mortgage Lending Value 5.8 Alternative Value Concept (2) Worth or (Normalized) Investment Value 5.9 Derivatives of Market Value 5.10 Cost‐Based Value Concepts 5.11 Final Comment: Can Valuation Methods and Credit Rules Affect the Property Cycle? Exercises
10 6 Valuation for Financial Reports and Other Accounting‐Related Issues 6.1 Introduction 6.2 The Fair Value Concept 6.3 The Fair Value Hierarchy, Disclosure Requirements and the Risk for Bias 6.4 Valuation of Public Sector Properties 6.5 Property Depreciation, Refurbishments and Free Cash Flows to the Property Firm 6.6 Auditing and Quality Assurance of Fair Values in Financial Reporting 6.7
